ABC Computer Company has a $20,000,000 factory in Silicon Valley. During the current year ABC builds $2,000,000 worth of computer components. ABC's costs are labor, $1,000,000; interest on debt, $100,000; and taxes, $200,000. ABC sells all its output to XYZ Supercomputer. Using ABCs components, XYZ builds 4 super computers at a cost of $800,000 each ($500,000 worth of components, $200,000 in labor costs, and $100,000 in taxes per computer.) XYZ has a $30,000,000 factory. XYZ sells three of the supercomputers for $1,000,000 each. At year's end, it had not sold the fourth. The unsold computer is carried on XYZ's books as an $800,000 increase in inventory. Calculate GDP using the expenditure method, the product method and the income method, showing that all three approaches give the same answer.
ABC Computer Company has a $20,000,000 factory in Silicon Valley. During the
current year ABC builds $2,000,000 worth of computer components. ABC's costs are labor, $1,000,000; interest on debt, $100,000; and taxes, $200,000. ABC sells all its output to XYZ Supercomputer. Using ABCs components, XYZ builds 4 super computers at a cost of $800,000 each ($500,000 worth of components, $200,000 in labor costs, and $100,000 in taxes per computer.) XYZ has a
$30,000,000 factory.
XYZ sells three of the supercomputers for $1,000,000 each. At year's end, it had
not sold the fourth. The unsold computer is carried on XYZ's books as an $800,000 increase in inventory. Calculate GDP using the expenditure method, the product method and the income
method, showing that all three approaches give the same answer.
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